Advice on my options

oliel

Hi there looking for some advice.  We have a mortgage with Clydesdale currently on rate of 2.49 which was over 5 years.  Rate ends on 31/5/23.  We can lock in a new rate on 1/12.  That will start from 1/6/23.  We are looking to swap to a new fixed rate with them and was thinking 3 years - but looking at their products on their website for existing customers it only appears they do 3 and 5 year fixes - and the lowest redemption penalty redemption on them is 2% in the final year.   The current lowest rate we can see on their websites for existing customers is 5.64% over 5 years - which will cost me approx £300 more per month - over 5 years equates to a lot.   We asked them if we lock in a new rate in December and rates reduced between then and 31/5 if we could change it and they have said yes.   We were thinking a3 year fix would be best just cant decided which would be our best option.   We prefer to lock in we prefer to know what we have going out.  Any advice most appreciated.

housebuyer143

I wouldn't personally lock in now. Paying £300 extra for 6 months on the assumption rates are going to be higher in 6 months is crazy to me.

They are priced very high at the moment to take into account the predicted base rate rises. 

I would just wait it out until may and see how the market is then.

oliel

Sorry I should probably clarify.   I can select a rate in December but that new rate would not start until 1/6/23.  I would not be paying £300 extra for the next 6 months I would be paying the same as I am now 2.49%.  Clydesdale have said that if the rates drop before 31/5 I can cancel the application to swap and the december rate and reapply so long as its before 31/5 before the current rate ends.  Hope thats clearer


housebuyer143 said:

I wouldn't personally lock in now. Paying £300 extra for 6 months on the assumption rates are going to be higher in 6 months is crazy to me.

They are priced very high at the moment to take into account the predicted base rate rises. 

I would just wait it out until may and see how the market is then.

Sorry I should probably clarify.   I can select a rate in December but that new rate would not start until 1/6/23.  I would not be paying £300 extra for the next 6 months I would be paying the same as I am now 2.49%.  Clydesdale have said that if the rates drop before 31/5 I can cancel the application to swap and the december rate and reapply so long as its before 31/5 before the current rate ends.  Hope thats clearer

K_S

oliel said:

Hi there looking for some advice.  We have a mortgage with Clydesdale currently on rate of 2.49 which was over 5 years.  Rate ends on 31/5/23.  We can lock in a new rate on 1/12.  That will start from 1/6/23.  We are looking to swap to a new fixed rate with them and was thinking 3 years - but looking at their products on their website for existing customers it only appears they do 3 and 5 year fixes - and the lowest redemption penalty redemption on them is 2% in the final year.   The current lowest rate we can see on their websites for existing customers is 5.64% over 5 years - which will cost me approx £300 more per month - over 5 years equates to a lot.   We asked them if we lock in a new rate in December and rates reduced between then and 31/5 if we could change it and they have said yes.   We were thinking a3 year fix would be best just cant decided which would be our best option.   We prefer to lock in we prefer to know what we have going out.  Any advice most appreciated.

@oliel I don't know about direct product-switches (PTs) but Clydesdale definitely does offer 2 year resi PTs through intermediaries and I would be surprised if that wasn't the case direct as well.

Generally speaking they also offer slightly better PT rates through intermediaries. To get a sense of the difference (if any), compare the direct PT rates offered https://secure.cbonline.co.uk/personal/mortgages/deal-ending/apply/ to the broker PT rates here https://www.clydesdalebankintermediaries.co.uk/product-transfers/

diystarter7

OP
I'm no expert but I do worry about anything and everything.
Decide what is best for you not just financially but if a big piece of mind makes you sleep easier.
Once you are into a new fix, at least you will know where you stand for a few more years and IMO, rates will remain volatile for several years at least and we won't see the lows that we have seen over the last 10 years or so for years.

oliel

@K_S Thanks yes they do do 2 year but  was a bit worried rates will be higher in 2 years and was thinking maybe 3 but they dont do 3 - Thanks for the tip re intermediaries best I could see direct was 5.76 - 5.69 with intermediary.  - Saving of £7 per month.   Just cant decided to go for 2 year or 5 cant really afford to be paying much more than the current rate offered so Im thinking 5? Its a difficult decision.

K_S

oliel said:

@K_S Thanks yes they do do 2 year but  was a bit worried rates will be higher in 2 years and was thinking maybe 3 but they dont do 3 - Thanks for the tip re intermediaries best I could see direct was 5.76 - 5.69 with intermediary.  - Saving of £7 per month.   Just cant decided to go for 2 year or 5 cant really afford to be paying much more than the current rate offered so Im thinking 5? Its a difficult decision.

@oliel If you'll struggle with rates above what you're being offered on a 5yr fix, then definitely worth considering fixing for 5 years so you have certainty about the monthly payment and it removes the risk of rates being significantly higher in 2 years time. The outcome - whether that ends up being the right decision financially or not will depend on the the future direction of interest rates, but at least it might be the right decision for your circumstances and preferences. 

If you have sufficient spare cash/income to absorb the risk of even higher rates in 2 years time then the 2 year fix might be worth considering.

housebuyer143

oliel said:

Sorry I should probably clarify.   I can select a rate in December but that new rate would not start until 1/6/23.  I would not be paying £300 extra for the next 6 months I would be paying the same as I am now 2.49%.  Clydesdale have said that if the rates drop before 31/5 I can cancel the application to swap and the december rate and reapply so long as its before 31/5 before the current rate ends.  Hope thats clearer


housebuyer143 said:

I wouldn't personally lock in now. Paying £300 extra for 6 months on the assumption rates are going to be higher in 6 months is crazy to me.

They are priced very high at the moment to take into account the predicted base rate rises. 

I would just wait it out until may and see how the market is then.

Sorry I should probably clarify.   I can select a rate in December but that new rate would not start until 1/6/23.  I would not be paying £300 extra for the next 6 months I would be paying the same as I am now 2.49%.  Clydesdale have said that if the rates drop before 31/5 I can cancel the application to swap and the december rate and reapply so long as its before 31/5 before the current rate ends.  Hope thats clearer

No brainer then, do it 👍

ader42

Your first post says they do do a 3 year… was that a typo?

oliel said:

 We are looking to swap to a new fixed rate with them and was thinking 3 years - but looking at their products on their website for existing customers it only appears they do 3 and 5 year fixes

In general are we confident that rates won’t be lower than now in 3 years time? I am. 

If mortgage rates can be 6% now, why can’t they be 7% (the historical norm) in 2 years time?

With the cost of everything going up I can see a lot of people going for shorter fixes just to give themselves a little more flexibility but I’m not sure the price difference between a 2 year and 5 year fix will be that great? - it really depends on your level of flexibility and how much certainty you need to bake in.

I’ve been on 2% for the last 4 years and fixed for 5 years (ending next October) as I knew I had a very specific time range I needed stability - yes I have paid more than many over that time but I could not have coped with the current rates a year ago (or now) so am glad I fixed for 5 years. 

Key thing is to get an offer locked in soon as you can as you don’t have to take it, you can always get a revised offer next March if appropriate for example. It might be an idea to get a 5 year offfer locked in and then if rates come down by spring get a new 2 year offer instead? 

simon_or

oliel said:

@K_S Thanks yes they do do 2 year but  was a bit worried rates will be higher in 2 years and was thinking maybe 3 but they dont do 3 - Thanks for the tip re intermediaries best I could see direct was 5.76 - 5.69 with intermediary.  - Saving of £7 per month.

I wouldn't sneeze at that difference. On a 5 year long fix, on a total cost including outstanding balance basis it's likely to add up to about £500-550. And there's no cost to use a broker.

2 vs 5 it looks like 5 would be better for you. But if you really want 3, you could look beyond Clydesdale as well?

RobertF82

oliel said:

Hi there looking for some advice.  We have a mortgage with Clydesdale currently on rate of 2.49 which was over 5 years.  Rate ends on 31/5/23.  We can lock in a new rate on 1/12.  That will start from 1/6/23.  We are looking to swap to a new fixed rate with them and was thinking 3 years - but looking at their products on their website for existing customers it only appears they do 3 and 5 year fixes - and the lowest redemption penalty redemption on them is 2% in the final year.   The current lowest rate we can see on their websites for existing customers is 5.64% over 5 years - which will cost me approx £300 more per month - over 5 years equates to a lot.   We asked them if we lock in a new rate in December and rates reduced between then and 31/5 if we could change it and they have said yes.   We were thinking a3 year fix would be best just cant decided which would be our best option.   We prefer to lock in we prefer to know what we have going out.  Any advice most appreciated.

Lock new deal now. Change later if rates go down. Although if they go down, they won't be going down by a lot in just 5-6 months. They may even go up for what we know.